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by rizzom5000 1259 days ago
> This is all about serving the lowest possible quality for the highest possible price, nothing about that has to do with "preferences".

I'm trying to follow this logically. Are you saying that if there were two options for a burger right next to another; say a McDonald's and a 5 Guys - the choice to buy a cheeseburger from 5 Guys instead of McDonald's has nothing to do with my preferences? I can come up with at least a dozen criteria for which the 5 Guys burger is objectively superior to the McDonald's offering, but choosing to pay more for that objectively superior product does not reveal preference?
2 comments
anonymouskimmer 1259 days ago
This reminded me of the 1/3 pounder burger. The actual preference of consumers was for a larger burger (or cheaper relative to size). The so-called "revealed preference" is that half of the consumers were bad at fractions.

https://culinarylore.com/food-history:aw-1-3-pound-burger-fa...

"The firm conducted a focus group and found that around half of the people surveyed thought that the A&W 1/3 pound burger was smaller than McDonald’s 1/4 pounder! “Why should we pay the same amount for a third of a pound of meat as we do for a quarter-pound of meat?” they said."

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yamtaddle 1259 days ago
You gonna pick McDonald's instead because the Five Guys burger box is cheaper and doesn't function quite as well? Should we take your still choosing Five Guys as a sign that you prefer that box?
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kuboble 1259 days ago
Yes. exactly. Quoting GP:

> the revealed preferences of consumers for those things is the cheaper version, not the better version.

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yamtaddle 1259 days ago
No, you cannot pick out the preference for one component of the offering that way. If there'd been a 5-cents-higher option with the better box, they might have chosen that. You can only compare the entire offerings—convenience, quality of all components combined, cost, customer service, and so on, and say that that entire bucket was what they preferred to the other entire bucket.
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marcosdumay 1259 days ago
Well, with non-diversified commodities, in a market with instant arbitration and universal complete knowledge about the products the Econ 101 models work.

On the real world, they don't.

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